Starhill Global's Toshin secures 6.7% increase in renewal rent

Rents to be reviewed every three years.

According to OCBC Investment Research, Starhill Global REIT (SGREIT) announced that the rent review for the Toshin master lease has been concluded, and that a renewal rent at 6.7% higher than the prevailing rate has been secured. 

Here's more:

This is consistent with our 29 Apr report that SGREIT may again benefit from rental upside following the completion of the review process. Recall that SGREIT had on 14 Feb secured a 10% increase in base rent, which was retrospectively applied for the term starting 8 Jun 2011. The revised rent will serve as the base rent for this Jun renewal.

Further rent review every three years. We understand that the increase in rent was determined based on the average of three market valuations, undertaken by independent licensed valuers in accordance with the terms of the Toshin lease.

While the renewed lease is for a period of another 12 years commencing 8 Jun, it provides for a review of the rental rate every three years.

All existing provisions of the Toshin lease, we note, will continue to apply.

For Mar, the Toshin lease contributed 86.3% of SGREIT’s stake in Ngee Ann City gross rent and 20.0% of SGREIT’s portfolio gross rent. Hence, we believe the rent increase may possibly boost SGREIT’s topline by 1.3% on an annualised basis.